Business experts have said that companies should consider training to “reduce wage inequality”.

The national living wage is set to increase to £7.20 an hour from April, but research from the Social Market Foundation has found that one in four businesses will face “significant productivity challenges” as a result of the change.

Beneficial for workers

The report found that those who are most likely to benefit are staff who work in jobs that do not require formal qualifications.

Social Market Foundation Chief Economist Nida Broughton said that the low supply of skills amongst those affected and lack of access to training in the workplace means that businesses and the Government will need to ensure that productivity rises alongside the new wage to reduce the risk of unemployment.

She added that if businesses can increase productivity, there will be less risk of higher unemployment and it will be more beneficial to workers.

Training

Adecco Group UK and Ireland Managing Director Alex Fleming stated that the national living wage has “the potential to reduce wage inequality and improve people’s lives across the UK.”

He said that the challenge for businesses in sectors such as retail, wholesale and hospitality will be lessening the impact of the new rate across the workforce.

"Businesses should consider training as one of the best ways to respond. Many workers eligible for the rate are low-skilled with little further education beyond their GCSEs. This research shows the value of investing in training and skills for long-term,” he added.